A Financial System Addicted to Exponential Growth

Abstract

Fossil fuels (coal, oil and natural gas) provide about 87 % of the energy utilized by humanity (http://www.bp.com/assets/bp_internet/globalbp/globalbp_uk_english/reports_and_publications/statistical_energy_review_2011/STAGING/local_assets/pdf/statistical_review_of_world_energy_full_report_2012.pdf), and modern societies are completely dependent upon this massive amount of energy to maintain and grow their size and complexity. Among the fossil fuels, oil takes a special place, not only providing about 33 % of global energy (http://www.bp.com/assets/bp_internet/globalbp/globalbp_uk_english/reports_and_publications/statistical_energy_review_2011/STAGING/local_assets/pdf/statistical_review_of_world_energy_full_report_2012.pdf), but also being the predominant transport fuel given its energy density and liquid form at room temperature. Since the exploration, extraction, and transportation of the other fossil fuels are themselves heavily dependent upon the availability of oil, a shortage of oil could easily lead to constraints on the supply of all the other fossil fuels. Coal, gas and even plants (such as corn and sugarcane) can be used to produce something like oil but much of the energy is used up in the conversion process. In the foreseeable future, these processes will not be able to significantly offset declines in oil production as there are severe limitations on the rate at which the required facilities could be put in place and the scale of production that they could support. Some transport sectors could be converted to use electricity, but the huge infrastructure and vehicle changes needed would require significant amounts of the declining net energy supplies available. History demonstrates that large scale energy use transformations have taken many decades to complete (Smil, Energy transitions: History, requirements, prospects, 2010). Thus, if global oil production falters, or even falls, within the next decade, economic growth will almost certainly grind to a halt.